Added anxiety to export

Photo courtesy: Daily Ittefaq, 29 June 2013

Added anxiety to export

by Irfan Chowdhury for AlalODulal.org

Very few governments, businesses or politicians have accepted their failures without making excuses or even lame excuses. But no Bangladeshi government has ever accepted its failing; fingers have always been pointed at others, highlighting their faults, or grand conspiracy theories have been orated against them and at the nation, inevitably reinforcing their devout role in guarding the country’s interests.

So the actions and reactions of the government and businesses in the wake of the latest blow to our exports in the form of a US decision to suspend its Generalized System of Preferences (GSP) with Bangladesh were hardly surprising.

The various analyses of the decision have been more interesting than the ban itself – it was the combined act of a certain interest group within and outside the country; it was due to unrelenting lobbying for a number of years by the American Federation of Labor and Congress of Industrial Organizations regarding workers’ rights in Bangladesh that wrongly alleged workers’ rights issues in export-processing zones and the ready-made garments sector; it was due to a letter from the leader of the opposition earlier in year seeking foreign intervention; it was a political rebuke by the US on a number of issues including mistreatment of Professor Yunus and his Grameen Bank.

But although the suspension will not directly affect the readymade garment industry, as the preferences are limited to products such as tobacco and ceramic goods and do not apply to clothing exports, there is a palpable fear that others like the European Union could consider a ban on preferential imports of readymade garments. And in diplomatic terms this is the first move, however symbolic, from the superpower following the aftermath of the April disaster.

To ascertain the possible impact of the ban, according to the Export Promotion Bureau, Bangladesh, the total exports during 2011-12 fiscal were $24 billion; exports to the US accounted for around $5.1 billion, about 21 percent of the country’s total export. The export share for apparel was worth $4.53 billion.

While the US authority said this is an opportunity for Bangladesh to prove itself in providing work safety and a decent wage, the factory owners and the industry business leaders (through their opinion pieces and commentary) along with the peak body Bangladesh Garment Manufactures and Exporters Association (BGMEA) did not waste a moment in denouncing that this cannot be a reaction to the fire accident or the building collapse which, combined, killed over 1300 people. In their shock and dismay they prefer to consider this to be a politically motivated move, believing that appropriate actions have been taken, some factories having been closed for safety reasons, a wage board having been set up, and foreign buyer groups such as Walmart are signing up to the industry safety revamp schemes.

Whichever way industry and government want to take this, there can hardly be any doubt that this is a clear message to them for repeated failures to take swift and appropriate remedial action. As the New York Times editorial on June 27th went:

“We have urged American and European companies to demand that suppliers improve working conditions and help to pay for factory renovations. But the fundamental responsibility lies with Bangladesh’s leaders, who have repeatedly said the government would beef up inspections and make it easier for workers to form unions, but has not done enough to follow through.

There is little doubt that revoking trade preferences will hurt businesses that are not responsible for the poor conditions in clothing factories. But Western governments have a right, which they have rarely used, to suspend these benefits when countries like Bangladesh repeatedly refuse to live up to their obligations to protect the rights and lives of their workers.

Leaders are unlikely to change policies that are unpopular with the powerful families that own clothing factories unless they are forced to do so. American and European leaders have few tools to exert such pressure, which is why they must use the ones they do have when the lives of millions of poor workers are at stake“.

There have been more fires since the Rana Plaza disaster. No compensation or rehabilitation program for the victims has been commissioned by BGMEA. A ten-point roadmap surfaced among another group of eminent industry owners but it needs further refinement. We also understand that there is tension and disharmony among lobbies within the owner groups.

There is a sea of analyses and recommendations listing reforms with immediate, short and long term milestones, which can be summarised into a few urgent actions: provide significant compensation to victims and their families; fix an acceptable minimum wage; allow workers to form unions; immediately audit all factories to identify and shut down those at risk; inject properly trained factory inspectors to conduct random checks and to impose hefty fines; and above all attempt to overcome the prevailing corruption.

From the perspective of foreign consumers and buyers, while pressuring our government through restricting trade privileges may have been thought to be effective, to improve working conditions in the apparel companies is what is most needed, which hardly gets done as there are lobby groups and MPs in parliament who have high stakes in the industry.

Even now many factories are operated with unsafe and exploitative working conditions – for example, with makeshift or non-existent proper fire exits, with no proper breaks or overtime pay. Enforcing international safety and health standards will be the most effective way to save workers, but this will need a huge fund to which all stakeholders should contribute.

Western retailers having come under enormous pressure following the disaster have agreed to chip in or are in the process of doing so – even though big retailers such as GAP or Walmart have not joined a collective plan, it has been reported that they are close to initiate their own factory repair schemes.

In the end even if this huge fund that is required to repair and upgrade the conditions of factories, such as better exits and fire safety, is found, the government has to do its bit – ensuring strict application of regulations and administration of laws. There are already laws on paper, such as the building codes but they are not obeyed or applied. In the absence of these provisions, local contractors use subcontractors who do not meet safety standards or give a decent wage to poor workers. This rudimentary and dodgy conduct cannot be too hard for foreign governments to detect. Perhaps they should encourage big retailers to address their invigilance when contracting out orders.

The industry has exploited workers for a long time and this is well known. Although there are counter arguments stating that it is very hard to make a super-profit or sustainable business ventures due to numerous constraints forcing many to go belly up, by and large this has been an industry where one could dream of becoming rich quickly, if all went according to plan. This motivation among factory-owning businesses and foreign retailing businesses is the reason why things never really improve. Of course there are other issues such as the enforcement of international laws and local regulations to protect workers from abuse.

On the other hand maybe there is a strong belief among the stakeholders and analysts that, at least for now, there isn’t an alternative to Bangladesh for the buyers, as infrastructures, legal framework, governance or working conditions are not so much better in other like countries which could provide such cheap labour. And that, as a consequence of ongoing intense scrutiny and efforts, the RMG sector will slowly improve by itself when bigger, better and compliant factories will replace the shonky ones.

In that situation, perhaps the most important issue or risk is not that we will lose business or we will be boycotted by western consumers. Rather, the real risk is without leadership, honest administration and a strategic plan to gradually move onto other sectors, we might be stuck with the RMG sector. Countires that have industralised, from nineteenth century England to modern China, went through a clothing/textile/leather phase (even the post second world war Japan made shoes and tee-shirts in 1950s), but as we know they have successfully moved on from that phase. The irony is, by suspending GSP, US is hitting precisely those non-RMG sectors. And no one is at all talking about that.

Nevertheless, months of criticism from most of the major media outlets in the world and continued pressure from foreign governments have failed to invoke credible speedy action in the RMG sector. Nor has a plan been developed to restore global confidence as critical arguments – acceptable work conditions, work safety, governance, factory monitoring and fair wages – are ignored by the industry.

Amid the suspensions there has been no shortage of recondite fulmination from authorities that they have taken many steps: labour law reform, ILO-led tripartite agreement to implement time-bound decisions and the formation of a ministerial panel to ensure compliance in garment factories.

But these abstract statements increasingly create more anxiety that tangible, sincere actions to address the workers’ woes will linger.

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“In that situation, perhaps the most important issue or risk is not that we will lose business or we will be boycotted by western consumers. Rather, the real risk is without leadership, honest administration and a strategic plan to gradually move onto other sectors, we might be stuck with the RMG sector. Countires that have industralised, from nineteenth century England to modern China, went through a clothing/textile/leather phase (even the post second world war Japan made shoes and tee-shirts in 1950s), but as we know they have successfully moved on from that phase. The irony is, by suspending GSP, US is hitting precisely those non-RMG sectors. And no one is at all talking about that.” Thank you for bringing this issue to the fore – excellent piece. Regards, Masud